January 9, 2011

Allocation of Resources for Protecting Public Goods against Uncertain Threats Generated by Agents

by Chen Wang

- This paper analyses a framework for designing robust decisions against uncertain threats to public goods generated by multiple agents. The agents can be intentional attackers such as terrorists, agents accumulating values in flood or earthquake prone locations, or agents generating extreme events such as electricity outage and recent BP oil spill, etc. Instead of using a leader-follower game theoretic framework, this paper proposes a decision theoretic model based on two-stage stochastic optimization (STO) models for advising optimal resource allocations (or regulations) in situations characterized by uncertain perceptions of agent behaviors.

Wang, C. (2010). "Allocation of Resources for Protecting Public Goods against Uncertain Threats Generated by Agents." IIASA Interim Report No. IR-10-015, Dec 2010.